Fix my trial balance and explain

Ty Koon, Harry Pitts and Eileen Dover are the founders of Sharpe Incorporated. The charter of the corporation authorized 500,000 shares of $5 par common stock, and 50,000 shares of $40 par, 5%, preferred stock. The company began business on January 1 of the current year.

Selected transactions completed by Sharpe Incorporated during the fiscal year-ending December 31, 2013, are as follows:

Jan 1 Issued 16,000 shares of $5 par common stock at $18, receiving cash.

Jan 1 Issued 7,200 shares of $40 par preferred 5% stock at $42 for cash. The dividends are payable semi-annually.

Jan 31 Purchased a two-year insurance policy for $34,080.

Feb 1 Purchased equipment for $290,000 in exchange for paying $50,000, issuing a $50,000, 180-day, 5% note payable, and issuing 9,500 shares of common stock.

May 1 Purchased 1,200 shares of the companys own common stock at $22 per share.

June 1 Declared a cash dividend at the stated amount on the preferred stock.

June 30 Paid the cash dividend on the preferred stock.

July 1 Issued $1,000,000 of 9-year, 8% bonds with interest payable semiannually. The amount of cash received was $1,092,880.

July 30 Paid the amount due on the note payable signed on February 1.

Aug 1 Sold 450 shares of treasury common stock purchased on May 1 for $26 per share.

Oct 1 Purchased 30,000 of the 100,000 outstanding shares of Precision Corporation for $5.10 per share, plus a $125 commission to the stockbroker.

Oct 16 Sold 250 shares of treasury common stock purchased on May 1 for $20 per share.

Nov. 1 Borrowed $36,000 from Second Bank by issuing a 90-day, 7% note.

Dec 15 Declared a cash dividend at the stated amount to preferred stockholders and $.50 per share on the outstanding common shares. The date of record is December 30, and the dividend is payable January 15, 2014.

Dec 31 Record revenue for the year of $1,975,000, receiving $500,000 in cash with the remainder on account.

Dec 31 Record expenses for the year (one compound entry). All were paid in cash, except for $30,000 on account.

Rent $170,000

Utilities 13,200

Salaries 760,000

Payroll tax expense 45,600

Advertising 120,000

Medical insurance 32,000

Commissions 63,000

Legal and accounting 18,000

Miscellaneous 8,400

Dec. 31 Paid the semiannual interest and amortized the premium on the bonds issued on July 1.

Dec. 31 Received a cash dividend from Precision Corporation of $0.10 per share.

Dec. 31 Precision Corporation reported earnings of $25,000 for the period from October 1 to December 31.

1).Write the Trial Balance

Journal Entries

Date

General Journal

Debit

Credit

Jan.1

Cash (16,000 Shares x $18)

$288,000

Common Stock (16,000 Shares x Par $5)

$80,000

Paid in Capital in Excess of Par - Common Stock (Bal.Fig.)

$208,000

Jan.1

Cash (7200 Shares x $42)

$302,400

Preferred Stock (7200 Shares x Par $40)

$288,000

Paid in Capital in Excess of Par - Preferred Stock (Bal.Fig.)

$14,400

Jan.31

Prepaid Insurance

$34,080

Cash

$34,080

Feb.1

Equipment

$290,000

Cash

$50,000

Notes Payable

$50,000

Common Stock (9500 Shares x Par $5)

$47,500

Paid in Capital in Excess of Par - Common Stock (Bal.Fig.)

$142,500

May.1

Treasury Stock (1200 Shares x $22)

$26,400

Cash

$26,400

June.1

Retained Earnings (7200*$40*5%)

$14,400

Preferred Stock Dividend Payable

$14,400

June.30

Preferred Stock Dividend Payable

$14,400

Cash

$14,400

July.1

Cash

$1,092,880

Bonds Payable (at face value)

$1,000,000

Premium on Bonds Payable (Bal. figure)

$92,880

July.30

Notes Payable

$50,000

Interest Expense (50,000*5%*180/360)

$1,250

Cash

$51,250

Aug.1

Cash (450 Shares x $26)

$11,700

Treasury Stock (450 Shares x Cost $22)

$9,900

Paid in Capital from Treasury Stock (Bal. figure)

$1,800

Oct.1

Equity Investment - Precision Corporation (30000 Shares x $5.10)

$153,000

Commission Expense

$125

Cash

$153,125

Oct.16

Cash (250 Shares x $20)

$5,000

Retained Earnings (Bal. figure)

$500

Treasury Stock (250 Shares x Cost $22)

$5,500

Nov.1

Cash

$36,000

Notes Payable

$36,000

Dec.15

Retained Earnings

$26,900

Preferred Stock Dividend (7200*$40*5%)

$14,400

Common Stock Dividend (0.50*(16000+9500-1200+450+250)

$12,500

Dec.30

No Entry on record date

Dec.31

Accounts Receivable

$1,475,000

Cash

$500,000

Sales Revenue

$1,975,000

Dec.31

Rent

$170,000

Utilities

$13,200

Salaries

$760,000

Payroll tax expense

$45,600

Advertising

$120,000

Medican Insurance

$32,000

Commissions

$63,000

Legal and accounting

$18,000

Miscellaneous

$8,400

Cash

$1,200,200

Accounts Payable

$30,000

Dec.31

Interest Expense (Bal figure)

$34,840

Premium on Bonds Payable (92,880/18)

$5,160

Cash Interest Paid (Face Value 1000,000*8%*1/2 semi annual)

$40,000

Dec.31

Cash

$3,000

Equity Investment - Precision Corporation (30,000 Shares x $0.10)

$3,000

Dec.31

Equity Investment - Precision Corporation (25,000*30%)

$7,500

Trial balance:

Account	Debit	Credit
Cash	669,525
Accounts receivable	1,475,000
prepaid insurance	34,080
Equity investment- Precision corporation	157,500
Equipment	290,000
Common stock		127,500
Paid in capital in excess of par - common stock		350,500
Preferred stock		288,000
Paid in capital in excess of par - preferred stock		14,400
Notes payable		36,000
Treasury stock	11,000
Retained earnings	41,800
Bond payable		1,000,000
Accounts payable		30,000
Premium on bonds payable		87,720
Paid in capital from treasury stock		1,800
Preferred stock dividend		14,400
Common stock dividend		12,500
Sales revenue		1,975,000
Equity income- precision corporation		7,500
Rent expense	170,000
Interest expense	36,090
Utilities expense	13,200
Salaries expense	760,000
Payroll tax expnese	45,600
Advertising	120,000
Medican insurance	32,000
Commissions	63,000
Legal and accounting	18,000
Commission expense	125
Miscellaneous	8,400
Total(wrong)	3,945,320	3,945,320

Equity Income - Precision Corporation

$7,500

The total of the Trial Balance should be $3,937,620. If your balance does not agree, make any necessary corrections before you proceed.

1). Fix my problem why it dosen't come out to be $3,937,620 as Total trial balance.

Hint: something about using 2.5% instead of 5% cuase its half